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Water-Saving Technology and Efficient Tariffs

  • Friedman, A.

    (State University Higher School of Economics, Moscow, Russia)

Dynamic model of efficient allocation of water with three sources of water supply (groundwater, surface water and the recycling technology with limited capacity) is constructed and analyzed. It is shown that in case of binding capacity constraint we can abandon the use of groundwater at some moment and then revert to it some time in future. Efficient path could be decentralized under suitable water tariffs. Comparative analyses of water tariffs for the two users that differ only in terms of the availability of recycling technology are undertaken.

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Article provided by New Economic Association in its journal Journal of the New Economic Association.

Volume (Year): (2010)
Issue (Month): 8 ()
Pages: 35-53

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Handle: RePEc:nea:journl:y:2010:i:8:p:35-53
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  1. James E. T. Moncur & Richard L. Pollock, 1988. "Scarcity Rents for Water: A Valuation and Pricing Model," Land Economics, University of Wisconsin Press, vol. 64(1), pages 62-72.
  2. Swierzbinski, Joseph E & Mendelsohn, Robert, 1989. "Exploration and Exhaustible Resources: The Microfoundations of Aggregate Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(1), pages 175-86, February.
  3. Noel, Michael, 1978. "Resource extraction and recycling with environmental costs," Journal of Environmental Economics and Management, Elsevier, vol. 5(3), pages 220-235, September.
  4. Chakravorty, Ujjayant & Magné, Bertrand & Moreaux, Michel, 2005. "A Hotelling Model with a Ceiling on the Stock of Pollution," IDEI Working Papers 368, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Levhari, David & Pindyck, Robert S, 1981. "The Pricing of Durable Exhaustible Resources," The Quarterly Journal of Economics, MIT Press, vol. 96(3), pages 365-77, August.
  6. Chakravorty, Ujjayant & Umetsu, Chieko, 2003. "Basinwide water management: a spatial model," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 1-23, January.
  7. Jihad Elnaboulsi, 2009. "An Incentive Water Pricing Policy for Sustainable Water Use," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(4), pages 451-469, April.
  8. David Zilberman, 1997. "Allocation and Pricing at the Water District Level," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 952-963.
  9. Schuck, Eric C. & Green, Gareth P., 2002. "Supply-based water pricing in a conjunctive use system: implications for resource and energy use," Resource and Energy Economics, Elsevier, vol. 24(3), pages 175-192, June.
  10. Zarnikau, Jay, 1994. "Spot market pricing of water resources and efficient means of rationing water during scarcity (water pricing)," Resource and Energy Economics, Elsevier, vol. 16(3), pages 189-210, August.
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